Italian restaurant chain
issued new fourth-quarter earnings guidance and said it expects flat same-store sales growth for fiscal 2003.
Buca's shares were down 14%, or $1.19, at $7.15 in recent
trading. The stock lost more than 50% of its value in 2002.
The Minneapolis-based company, which operates Buca di Beppo and Vinny T's restaurants, said it expects to post a fourth-quarter net profit before special items of 14 cents a share on revenue of $63.5 million, marking a 31% increase from the $48.3 million in sales it recorded in the year-ago period. Wall Street analysts were expecting the company to earn 19 cents a share on revenue of $65.9 million, according to research firm Thomson Financial/First Call.
After two noncash restructuring charges of up to $790,000, the company expects a profit of about 11 cents a share.
Same-store sales at Vinny T's of Boston fell 8.8% in the quarter, while sales at Buca di Beppo declined 2.5%. The company attributed the revenue shortfall to slowed consumer spending during the holiday season and severe weather conditions in the Boston area. In light of Buca's disappointing sales performance, SG Cowen lowered its investment rating on the stock to market perform from strong buy.
However, Buca said it is encouraged by the successful launch of 14 new restaurants and new marketing initiatives that include its "Buca for Two" menu and a continued emphasis on take-out service. Another cause for optimism, the company said, was its recent signing of a new advertising agency -- Crispin, Porter & Bogusky -- which it credits with helping generate favorable feedback on its new menu items in test markets.
Looking ahead, the company sees flat comparable restaurant sales for 2003 and earnings of 57 cents to 60 cents a share, a 15% to 20% increase from year-ago levels. The company also expects to open 14 new restaurants in 2003, compared with its previous expansion plan of 19 new locations. Its fourth-quarter results and further guidance will be released on Jan. 15.